Department of Water Affairs on their Strategic Pan and Budget 2010/11

Water and Sanitation

16 March 2010
Chairperson: Ms M Sotyu (ANC)
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Meeting Summary

Members continued the previous day’s meeting with the Department of Water Affairs, specifically for the purpose of receiving a briefing on the Department’s strategic plan and budget. The Chairperson repeated her dissatisfaction with the poor quality of documents provided by the Department, which she said made it impossible to use these as reference documents. Another Member suggested that if good photocopies could not be made available, then the documents must be sent to the Committee electronically.

The first presentation dealt with New Augmentation Projects, and the Department outlined the major projects on which it was currently working. These projects had created in excess of 10 000 jobs, although these were mostly project-specific in nature. The Department had set itself a baseline target of achieving 20% Broad Based Black Economic Empowerment (BBEEE), in relation to both employment and procurement. The Department owned approximately 350 dams, 46% of which needed refurbishment.
Members asked whether those dams needing refurbishing were unsafe for the surrounding communities, and if this had been communicated, and questioned the criteria for building of dams. They asked when the Minister would release the Green Drop Report. They questioned the BBEEE targets.

The second presentation, by the Trans-Caledon Tunnelling Authority (TCTA), noted that the Authority did not rely on the State’s finances. It had received unqualified audit reports and noted no fruitless and wasteful expenditure. In addition to that fact that it was adding to the development of local economies through its projects, it also built capacity through the granting of bursaries to previously disadvantaged communities to study in fields such as engineering and accounting.  Its funding model had also changed so as to allow BBBEE companies to finance these projects.  Members asked whether TCTA would be providing a national water resource infrastructure, asked how it benefited financially, and called for a detailed breakdown of the work done over the last two financial years, and the relationship with National Treasury.

The Department gave a presentation on the implementation of Regional Bulk Infrastructure and the Accelerated Community Infrastructure Programme (ACIP). The Regional Bulk Programme was started in 2007 and was intended to supplement the financing of the development of regional bulk water infrastructure. Its needs outweighed its budget, which was also likely to escalate significantly, and this affected the numbers of projects it could execute. 2 448 jobs were created in the first three quarters of the financial year. The challenges included the misuse of funds by municipalities, poor capacity and cost escalation. Members asked if the Department was satisfied by the work being done, asked for details of the Green Agenda, and asked how the Department assisted communities in fund-raising and how many projects were given to previously disadvantaged persons

The Department presented a report on rain water harvesting. The initial direction was aimed at providing rain water harvesting mechanisms that would allow communities to store water, such as dams for crop use. This was expensive and the coverage was mild. With the coming of drought and no water within the municipalities the Department then focused on rain water tanks, and had adopted a two-fold intervention, in which the initial technologies dealt with food security and poverty alleviation whereas the drought interventions focused on access. The Department acknowledged that without water rural development could not be a success. The Department had various mechanisms within the provinces such as co-ordinating committees. The challenges included the fact that where water had been made available, at great cost, the Department of Agriculture was not ready to utilise the water because the structures at provincial level were not aligned to the Departments’ programmes.

The Department also highlighted some of the lessons that had been learnt from the interaction with the Committee, including the need to embrace an outcomes-based approach, the need to consult with the Committee on how best to harmonise support to local government, the need to translate the agenda of transformation into deliverables, and to provide politicians will full information on options available and the cost benefit analysis, to allow them to make the best decisions. Furthermore, there was also a need to improve communication at all levels, and to partner with institutions. Members asked about the non-availability of documents and lack of clarity in the quality of documents. Chairperson reminded the Department to also improve the working relationship between the Regional Chief Directors and the Municipalities. The Department was further encouraged to improve the number of female Regional Chief Directors.


Meeting report

Department of Water and Environmental Affairs (DWEA): Strategic Plan and budget presentation
New Augmentation Projects: Refurbishment & Rehabilitation of Infrastructure Presentation
Mr Cornelius Ruiters, Deputy Director-General: NWRI: Department of Water and Environmental Affairs, said that the Department currently had many projects it was implementing. Among these were the Vaal River Eastern Subsistence Augmentation Project and the Kumathi River Water Augmentation Scheme. The Department was also currently in the process of implementing the second phase of the Olifants River Water Development Project. The total cost of the dams being built stood at R2.1 billion, while the cost of its distribution networks were in the region of R5.4 billion. The first phase of the Mokholo Crocodile River Augmentation scheme - which was due to be completed in 2013 - was set to cost R2.1 billion. The raising of the Clanwilliam Dam wall was set to cost in excess of R800 million. This project was due to get off the ground within the coming financial year.

The number of jobs created through these projects totalled in excess of 10 000. Employment created was, however, project-specific, with post-completion employment limited to maintenance and operations.
  
The Department had set a baseline target of 20% in terms of both broad based black economic empowerment (BBBEE) employment and procurement, though it was aiming to move towards a target of 50%.

Dam safety regulations were benchmarked against international standards. Of the approximately 350 dams owned by the Department, 46% needed attention and to be prioritised. Of these 18 had been rehabilitated, while 14 were currently being worked on.

Discussion
Mr P Mathebe (ANC) asked how much distance there tended to be between dams. He noted that some might be in a 20km radius of each other.

Mr Ruiters answered that the cost was currently in the region of R2.8 billion. There had been an escalation in costs as the pump storage was no longer being built by Eskom. The distance between dams depended on the demand for infrastructure, though it usually varied from 60 to 250 km. It was also much more expensive to have stand-alone dams than an integrated system.
 
Ms A Lovemore (DA) asked whether the Department put pressure on Eskom to minimise its water usage. Power failures also resulted in water shortages. She asked if the figure of 350 dams was an exact figure. She also questioned whether some dams were unsafe, and, if so, whether this would be communicated to communities.

Mr Ruiters answered that Eskom was generally very good with its water usage, particularly with reuse and recycling. There was interdependence between water and electricity and the effective provision of each.

The Department could provide a full asset register as to the exact number of dams. It also ensured that all dams could handle floods and were generally safe.

Mr J Skosana (ANC) asked why the Department’s BBBEE policy in relation to procurement had only a 20% set target.

Mr Ruiters answered that 20% was merely the baseline target set. He acknowledged that this figure was quite low, and there was a need to increase BBBEE’s priority status. This target should move towards 50% within the next three years.

Hon Buyelwa Sonjica, Minister of Water and Environmental Affairs, added that the Department had not performed well in terms of procurement in responding to BBBEE. It had therefore undertaken to meet with all branches in order to ascertain how each had performed over time in this regard. It would not like to put a cap on BBEEE participation.  There was also a need to look at the grading of companies as this approach was enabling the dominance of monopolies.

The Chairperson asked what criteria were used when deciding to build a dam.
 
The Minister replied that she would establish a task team to look into this issue.
Mr G Morgan (DA) asked when the investigation into the previous Director-General would be dealt with.

The Minister responded that this process should have been completed by 31 March 2010.

Mr Morgan asked how the Department was planning on reducing the number of mines without water licences.
 
The Minister answered that a task team had been set up to deal with the backlogs regarding water licences for mines. This would be dealt with within the next four months.

Ms Lovemore asked when the Green Drop Report was to be made public.

The Minister answered that the Green Drop Report would be released on 19 April 2010.

Trans-Caledon Tunnelling Authority (TCTA) Presentation

Mr James Ndlovu, Chief Executive Officer, Trans-Caledon Tunnelling Authority, noted that the Trans Caledon Tunnelling Authority (TCTA) was established to provide special liability management. It was vital that this organisation be financed in a way that was commercially viable. As all the projects were market-financed, they did not impact on the State’s finances. It was therefore ensured that these projects were attractive to funders and investors, both locally and internationally.

TCTA had received unqualified Audit Reports and noted no fruitless and wasteful expenditure. Cost-to-savings ratios were also very low. Despite concerns raised around TCTA’s negative equity, it was acknowledged as being a going concern. Where necessary, all its projects had received a Government guarantee. This was done as part of its security guarantee, to make a project seem more attractive to the market. This implicit guarantee, and the strict ring-fencing of the projects in order to finance them over time, were security features.  The 20-year tenure was done in order to ensure that water tariffs were kept at a low level.  In addition to TCTA adding to the development of local economies through its projects, it also built capacity through the granting of bursaries to previously disadvantaged communities, to study in fields such as engineering and accounting.  It funding model had also changed so as to allow BBBEE companies to finance these projects.

Discussion
Ms Lovemore asked whether TCTA would be providing national water resources infrastructure.

Mr Ndlovu answered that this issue was still in the process of being dealt with by the Department.

Mr B Holomisa (UDM) asked what relationship there was between the TCTA and National Treasury.

Mr Ndlovu answered that TCTA’s work was monitored by the Department as well as National Treasury, particularly in working towards guarantees which would make its projects more attractive in the market.

Mr Skosana asked how TCTA benefited financially.

Mr Ndlovu answered that TCTA worked for Government (having been set up by it in 1986). It was a non-profit organisation. In all its projects, a value was attached, which covered administration costs. Any remaining monies would go directly into servicing its debt.  
  
Implementation of Regional Bulk Infrastructure and Accelerated Community Infrastructure Programme (ACIP) Presentation
Mr Trevor Balzer, Programme Manager: Special Projects, DWEA, said that the Regional Bulk Infrastructure Programme was started in 2007 and was intended to supplement the financing of the development of regional bulk water infrastructure.

While the budget for its 2010 was R4.42 billion, its projected needs stood at over R60 billion (with a possibility of this reaching as much as R110 billion). This had affected the number of projects it could execute as well as the way in which these projects were sequenced.

The Department currently had 107 projects which it was trying to fund. When it considered funding the projects, there were certain criteria that had to be met. The project must be implementation-ready, aligned to regional and national water resource development strategies, and have stakeholder involvement and commitment. The Department worked closely with municipalities in identifying projects.

Through the projects it had initiated in the first three quarters of the current financial year, it had generated 2 448 jobs.

Challenges faced included the misuse of funds by municipalities, poor capacity and cost escalation.
 
Discussion
Mr Holomisa asked what progress had been made by the ACIP. He also asked if the Department was satisfied with the work done by these two structures.

Mr Balzer answered that as there was insufficient funding, the progress made was not satisfactory.

Ms Lovemore asked what the Green Agenda was.

Mr Balzer answered that the Green Agenda was a multi-Departmental focus driven by issues such as climate change.

Mr Skosana asked how the Department assisted communities to raise funds.

Mr Balzer answered that the Department could not directly assist municipalities to raise funds.

Mr Mathebe asked how many projects had gone to previously disadvantaged persons.

Mr Balzer added that, though he did not have the exact figures in relation to this with him, it could be provided to the Committee.

The Chairperson asked how possible it would be to use money left over from the annual budget for emergency projects.

Mr Onesmus Ayaya, Chief Financial Officer, Department of Water, answered that this was possible.

Rain Water harvesting briefing
Ms Thandeka Mbassa, Deputy Director-General: Regions, DWEA, presented the report on rain water harvesting. She said that this programme was the Department’s contribution to rural development. However, it was “a drop in the ocean” when tested against the need.  This process had provided a learning process for the Department. The initial direction was aimed at providing rain water harvesting mechanisms that would allow communities to store water, such as dams for crop use. This was expensive and the coverage was mild. With the coming of drought, and no water within the municipalities, the Department then focussed on providing rain water tanks. This intervention was twofold. The initial technologies dealt with food security and poverty alleviation, whereas the drought interventions focused on access. The Department acknowledged that without water, rural development could not be a success.

The Department had various mechanisms within the provinces such as co-ordinating committees. There were challenges. In places, although water had been made available, at enormous cost, the Department of Agriculture, Forestry and Fisheries (DAFF) was not ready to move in and utilise the water. The Department of Rural Development and Land Reform was also experiencing a similar problem, where land had been redistributed but there were no mechanisms to ensure that the land was utilised. The challenge was that the structures at provincial level were not aligned to the departments’ programmes, and there was not sufficient communication at all levels.

Discussion
Ms Lovemore interjected and asked why copies of the report that was being presented were not circulated to members.

The Chairperson also questioned the Department on the non-availability of the document.

Ms Nobubele Ngele, Acting Director General, Department of Water, apologised for the non-availability of documents and committed that these would be made available in future.

Mr B Holomisa (UDM) proposed that the Committee focus on charting a way forward with the Department, following what had so far been presented.

Mr P Mathebe (ANC) agreed and suggested that the Committee focus the remaining time on the proposed agenda.

Ms Lovemore strongly disagreed with the previous speakers. She believed that the Committee should listen and seek clarification in readiness for the budget debate in parliament. Members of the Committee could not debate effectively if the reports were not presented. She suggested that the Committee proceed to the next presentation, if the document was available.

The Chairperson directed the Committee to a discussion on the way forward.

Highlights of the lessons learnt from interaction with the Committee

Ms Nobubele Ngele highlighted some of the lessons that had been learned from the interaction with the Committee. She noted that there was a need for the Department to adopt an outcomes-based approach that clearly set out the output and how it related to the investment made. It was also necessary that the Department consult with the Committee on how to harmonise support to local government, given the funding constraints of the Department and whilst also carrying out the Departments primary functions. There was also a requirement to translate the agenda of transformation into deliverables. There was also a need to provide Members with information on options available, and the cost benefit analysis, so as to allow them to make a fully informed decision. It was also necessary for the Department to engage with National Treasury in instances where the Department foresaw a possible under-spending, to allow the Department to get permission to spend the money on urgent matters.

The Department also gave an undertaking that in future it would provide the Committee with the documents to be presented three days before the meeting. Ms Ngele also emphasised the need to improve communication, which would extend also to better informing the public about some of the good work the Department was doing, and to enhance partnerships with institutions.

Discussion
The Chairperson reminded the Department to also improve the working relationship between the Regional Chief Directors and the Municipalities. As had been noticed, the Regional Chief Director in Limpopo did not seem to have much idea of what was going on in that region.

The Chairperson asked how many of the Regional Chief Directors were female.

The Acting Director General replied that there were two females but pointed out that there was work being done to improve this number.

Mr Mathebe thanked the Department’s representatives, but reminded them about the need to implement matters that had arisen from the debates. The issue of communication was important as it was embarrassing that some of the documents circulated were not clear and others were not available.

The meeting was adjourned.





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